New Tax-favored Benefit for Employees with Children
Takeaways: Trump Accounts are a new type of custodial savings account for children under 18, established under new Internal Revenue Code section 530A. For U.S. citizen children born between January 1, 2025, and December 31, 2028, there’s a $1,000 seed contribution from the U.S. Treasury. The White House states the purpose is to “afford a generation of children the chance to experience the miracle of compounded growth and set them on a course for prosperity from the very beginning.” Employers can contribute up to $2,500 per year (adjusted for cost-of-living increases after 2027) to a child’s Trump Account , and this contribution is generally tax-free to the employee. Total contributions are capped at $5,000 per year per child (adjusted after 2027 for cost-of-living increases). Trump Accounts must be invested in eligible mutual funds or exchange-traded funds that track qualified indices like the S&P 500 , with annual fees not exceeding 0.1 percent of the account balance. Earnings ...